Green Finance

What is Green Finance and what does it mean for SME lending?

11 Jul 2021

Green finance is a type of finance that’s been developed to support environmentally friendly businesses or business activities. This relatively new form of business finance has seen significant growth in recent times due to the commitments that governments, businesses and society has made to reach net-zero emissions by 2050 (underpinned by the Paris Agreement).

What is Green Finance and what does it mean for SME lending?

What green finance means for SME lending

It’s fair to say, ‘green’ considerations have been in the mainstream for many areas of financial services for a while, as more businesses aim to reduce their impact on our environment.

Here at Funding Options, we’re determined to work with our lending partners to drive a greater awareness of why it's important to support SMEs transition to more carbon neutral business practices and activities. 

As more businesses look to improve their own impact on the environment whilst looking for green finance options to help fund their business, the global economy could have a significant positive impact on sustainability.

Why businesses should consider going green

SMEs are responsible for approximately 25% of the UK CO2 emissions. This means that unless SMEs are able to transition successfully to becoming carbon neutral, the UK will be unable to meet its Paris Agreement commitments. 

Whilst there are numerous changes businesses can make to become carbon neutral, at Funding Options we recommend the following as simple steps to consider:

  • Switching to renewable energy (such as solar panels or biomass boilers)

  • Considering purchasing an electric or hybrid vehicle for your businesses fleet

  • Install a smart meter

  • Minimise the waste from your products and packaging

  • Introducing travel-share incentives, and bike schemes 

Find out some more ways to make your business net zero here.

Boosting growth with a more sustainable finance option will not only help individual businesses reach a carbon neutral or even positive state but it also helps build greater engagement with customers who are now actively looking for better commitments from the businesses they work with. 

By choosing a more sustainable approach to borrowing, businesses are actively moving towards a better, cleaner future whilst helping to improve the environment we all share.

Find out more about securing green funding for your business and start your journey with us, here.

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